Jake Shahrooz–owner of Jake’s Falafel, a former Newton restaurant–is suing the insurance firm Travelers over a denial of coverage following carbon monoxide infiltration at the restaurant.

Jake’s Falafel was located at 740 Beacon St., where Formosa Bun & Dumpling Factory is now, from 2011 until last summer.

In December 2024, the water heater at the restaurant broke. A plumber determined it was not replaceable due to carbon monoxide being emitted into the restaurant from the heater, which turned out to be caused by a blocked chimney. This meant the restaurant had to be shut down and food thrown out.

Jake’s had a total of $13,938.10 in inventory-related losses and an estimated $30,871 in lost revenue. The owners sold the restaurant in 2025.

In January 2025, Travelers insurance hired an engineering firm to conduct a carbon monoxide test, which was inconclusive, because the heater had already been shut off. Travelers then denied Jake’s insurance claim, saying “There was no direct physical loss of or damage to property at the described premises from a covered cause of loss,” and that “because there was no direct physical loss of or damage to property at the described premises from this situation, your policy does not provide coverage for this loss.”

Travelers said Jake’s policy excluded pollution, and that this included carbon monoxide. In their view, because carbon monoxide leaves no
structural damage and does not require remediation, there was no direct physical loss to Jake’s.

It is the norm for commercial insurance policies to exclude pollution, e.g., a factory that has an oil leak. Massachusetts courts, however, have previously ruled that carbon monoxide contamination in a non-industrial setting cannot be considered under exclusions for pollution. Jake’s sent a letter to Travelers citing Matzner v. SEACO Insurance Co, a 1998 Massachusetts Superior Court decision related to a similar incident. Travelers continued to deny Jake’s claim. This is what led to Jake’s suing Travelers.

In Jake’s view, their restaurant-specific insurance policy was intended to include coverage for the loss of food. “Every contract in Massachusetts, including insurance contracts, contains an implied covenant of good faith and fair dealing,” notes the original lawsuit. Jake’s is seeking treble damages plus attorney’s fees from Travelers.

This lawsuit was originally in Newton District Court, but was transferred to the United States District Court for the District of Massachusetts, which is a more appropriate venue for a lawsuit seeking damages of over $75,000 and where the two parties are located in different states.